Broke SAA wields the axe, 1000 employees in danger

SAA is facing turbulent times as it plans to reduce the number of its staff members.
SAA is facing turbulent times as it plans to reduce the number of its staff members.
Image: FILE PHOTO

Cash-strapped South African Airways has embarked on a retrenchment process that could see close to 1,000 of its employees exiting the parastatal.

The airline announced on Monday evening that it has informed all its 5,146 workers that it was embarking on a restructuring process that could lead to job losses.

The retrenchments are expected to affect staff at all SAA divisions and departments. Workers at the company's subsidiaries like SAA Technical, Mango Airlines and Air Chefs would not face the axe.

Acting chief executive officer, Zuks Ramasia, said the airline has commenced a consultation process with all employees in line with section 189 of the Labour Relations Act.

The act requires an employer to consult with recognised labour unions and keep abreast employees who may be affected by the restructuring process.

Ramasia said: "It is difficult to estimate the number of employees who may eventually be impacted. No final decision will be taken until the consultation process is concluded. However, it is estimated that approximately 944 employees may be affected."

She said SAA hoped to minimise the impact while offering support to those who would be directly affected. She said SAA has faced numerous challenges over the past few years culminating in the current grave situation.

The challenges include funding and liquidity; inability to borrow indefinitely without repaying debt; high interest costs on loans; volatile and fluctuating fuel price; currency volatility; insufficient revenue and cash generation in relation to operating cost; ageing fleet which is expensive to maintain and is fuel inefficient, making it difficult for SAA to compete in the market place; and aggressive international and regional competition for revenue stimulation and network optimisation, she said.

“In addition, SAA’s balance sheet has historically been weak and remains so despite recent substantial capital injections from the government.

"Our continued losses and reliance on government guarantees to borrow money from lenders, have increased the interest costs which impacts the operating cost of the business," said Ramasia.

“We urgently need to address ongoing lossmaking position that has subsisted over the past years.  That is why we are undergoing a restructuring process that seeks to ensure effective implementation of the accelerated long term turnaround strategy amidst the present prevailing operational challenges.

It is difficult to estimate the number of employees who may eventually be impacted. No final decision will be taken until the consultation process is concluded. However, it is estimated that approximately 944 employees may be affected.

She said in terms of the Labour Relations Act, SAA and representative trade unions may agree to select a facilitator or alternatively, request the Commission for Conciliation Mediation and Arbitration to facilitate the consultation process, which may last until January 11 2020.

Ramasia said during the consultation process, SAA will engage meaningfully with the recognised unions and affected employees on: appropriate measures to minimise the number of retrenchments; mitigate the adverse effects of the retrenchments; the method for selecting the employees to be retrenched; the severance pay for employees that may be retrenched; affected job categories; and the timing of retrenchments due to operational requirements, if required. 

“These hard decisions were necessary to put SAA on a more sustainable footing while ensuring we continue to offer customers the best service. It is a matter of great regret that that we will part ways with some loyal colleagues. We are taking all possible steps to ensure these changes are managed in a caring manner and that everyone is treated with dignity,” said Ramasia.

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